"There was a long-standing sense that Chinese officials knew what they were doing, in terms managing their financial and economic systems. That sense was around for a long time," Altman said in a CNBC "Squawk Box" interview.

"Now there's a sense that they don't know what they're doing. That's a double-barreled negative as it relates to the perception of China, and it plays into the underlying sense that emerging market economies have been slowing," added Atlman, an assistant treasury secretary in the Clinton administration.

Overseas trade has been weighing on U.S. stocks recently and has contributed in part to some wild swings in the three major U.S. indexes.

In the waning hours of Tuesday's trading session, U.S. stocks not only gave back their gains, but recorded their worst reversal since October 2008 amid overwhelming uncertainty about what would happen in China trading, Charles Campbell, executive director at MKM Partners, said Wednesday.

"What we saw yesterday was concern about how Asia would respond … to the rate reduction by the PBoC [People's Bank of China]," Charles Campbell, executive director at MKM Partners, told "Squawk Box."

"[China] is going through a transition right now. They remain, and probably will remain for some time, a planned economy," Campbell said. "They are trying to grow at a controlled pace in a supply-driven, as opposed to a demand-driven, fashion."